Is your cheap guitar holding you back?
The answer to this question all depends on whether you have the right cheap guitar or not.
Above is me playing my SX Furrian Fat. It's called "Fat" because it has a humbucker pickup in the neck position instead of the traditional single-coil for both positions.
The Furrian is a Telecaster style guitar available from Rondo and sells new in the USA for under $200. That's cheap money for a new electric guitar in 2021. Last year, I bought not only the Furrian Fat seen above but also a regular Furrian as well. However, I had a very specific reason for getting these two guitars, which I'll cover in a moment.
On that whole "an expensive guitar will make you a better player" argument...
Most of the time, cheap guitars play just as good as the expensive ones do, with emphasis on the word most.
For example, take the Fender Player Telecaster. What makes that guitar more expensive is what you don't see. The pickups will have better dynamic response. Under the pick guard and control plate, you will find good wiring, proper shielding, proper solder connections, full size potentiometers and a traditional (and more expensive) pickup switch instead of one that uses a small PCB (printed circuit board). The fret ends are also usually finished better.
...but does any of that stuff make you a better player?
As long as you're not fighting with the instrument...
As has been said by many thousands of guitar players over the years, good setup really, really matters.
The #1 thing that makes a cheap guitar play terribly is the fact it's not set up. Out of the box, the string action is sky high, neck relief is totally wrong, intonation is way off, and so on. In that state, of course the guitar will play terribly and you'll be fighting with it right from the start until a proper setup is done.
Time spent on setting the guitar up will make a world of difference. There's no excuse not to know how to set a guitar up as there are many YouTube videos explaining how to do it.
But is that all there is to it to become a better player? Just a good guitar setup?
No, there is more.
This is where I explain why I got the Furrian guitars to begin with. It all comes down to the neck. As I've mentioned before, that particular guitar has a thicker neck with a flatter 350mm (almost 14") fingerboard radius and jumbo frets. For a Telecaster style guitar, this is obviously nonstandard, but it agrees with my fret hand very well.
I did not come to know this until after I spent some time with thin-necked guitars first.
For those of you who have been following me a while, you remember when I had the black Squier Classic Vibe '50s Stratocaster. Good guitar? Yes. Great, in fact. But it had a thin neck on it that I just couldn't get along with. No amount of good guitar setup would ever magically thicken up that neck, so it had to go.
The Furrians I have now literally sell for less than half the price of one of those Squier CV guitars, but the Furrian neck is one I don't fight with.
You are better off buying several cheap guitars to find out what agrees with you best
I can understand spending a bunch of money on a guitar when you are absolutely sure of exactly what works for you. But if you're not sure of what guitar suits you best, going cheap and staying there until you find something good is the better option.
For me, I found the right cheap guitar for what I like to play. It's comfortable, I don't fight with it, and it allows me to continue to learn new things and advance as a guitar player. But this was not an overnight thing, and I had to go through several other guitars before landing on something that really worked.
I am not saying you have to play the same guitar I do. Not at all. What I am saying is to learn how to do a good setup first. If that doesn't help improve things, try different cheap guitars, and especially go for things you haven't tried before. You have options. There is 25.5" scale (Strat/Tele), 24.75" scale (Les Paul/SG), solid body, semi-hollow body, and so on among other things.
When you find the one that works for you the best, then you can consider throwing some big cash at a more expensive guitar. And that may not even be necessary, because once you find something you really like, why replace it?